'Great wall of suspicion' persists between China, India-17 Dec, 2010,

17 Dec, 2010, 06.25PM IST,REUTERS

'Great wall of suspicion' persists between China, India

NEW DELHI: Chinese Premier Wen Jiabao left New Delhi on Friday, vowing that India will never be a rival, but his rhetoric has done little to lift Indian unease over a long-running border dispute and China-Pakistan relations .

Despite the effusive displays of warmth during Wen's visit

neither side appears anywhere close to resolving differences over their disputed border, China's policy on Kashmir and its close security ties with India's arch-rival, Pakistan.

"Because the relationship had entered into a rough phase, China probably calculated that the downward trend needed to be arrested and that explains the visit," said Kanwal Sibal, who was India's former foreign secretary from 2002-03.

"But...he did not seem to come prepared with any concrete decisions or signals to arrest these problems."

Wen's visit is the first by a Chinese premier in five years and he brought with him more than 300 business executives, many of whom signed deals with Indian firms worth more than $16 billion.

Even as trade ties between the world's two fastest-growing major economies continue to flourish, with Wen setting an ambitious target of $100 billion by 2015, he gave few firm commitments on when and how India's ballooning trade deficit with China would be addressed.

Wen said he would give Indian companies greater access to the I.T., pharmaceuticals and agricultural products sectors in China, in a bid to assuage Indian exporters, who have been frustrated with the slow pace at which they see China opening up its markets.

"I don't think that's going to happen quickly," Sibal said. "China doesn't yield ground quickly. Even with powerful players, China hasn't done much to satisfy their demands."

"My fear is that while the trade volumes will increase, the trade deficit will also increase."

India's trade deficit with China is by far the highest among its trade partners and could touch $25 billion this year, which would account for around a fifth of India's total expected annual deficit.

India has sought to diversify its trade basket, but raw materials and other low-end commodities such as iron ore still make up about 60 percent of its exports to China.

At the start of his trip, Wen said he was looking forward to an early launch of negotiations for a free trade agreement, but no progress was made due to Indian worries that it might be a dumping ground for cheap manufactured goods from China.

No other country has initiated more anti-dumping investigations against China at the World Trade Organisation than has India.